I believe a compelling argument can be made that reputation and emotional stability are personal capital assets, and that damage to those assets are deductible capital losses under IRS regulations which would offset gains derived from court ordered monetary recovery for those damages.
Thus, if the IRS rules that recovered damages are income which should be taxed (which is specious and contrary to long established previous rulings), then common sense dictates that the offsetting deduction should be allowed, resulting in no increase in tax burden.
(I know, I know, since when has the IRS or other government entities ever applied common sense in rules, regulations, or governance.)
After their legal bills, I wonder how much ( if any ) money will be left ?